Retirement Education
As a BIG BENEFIT to our clients and prospects, Three Lakes Trading Company has provided the Retirement changes made from 2001.The Economic Growth and Tax Relief Reconciliation Act of 2001 is the largest change in tax regulations in 20 years. The changes include federal income tax rate reductions; increases in IRA, retirement and pension contribution and compensation limits; education funding enhancements, federal estate and gift tax reductions and an increase in the unified credit. Three Lakes Trading Company will provide the changes and accurate information as it relates to RETIREMENT PLANNING only. If you are interested in the other changes regarding tax rates, estate, distribution or education changes, please contact Justin Boshnack at 800-882-3863.
The following retirement enhancements became effective on January 1 st , 2002. Individuals who are 50 or older are able to make additional "catch-up contributions" to IRAs, 401Ks, SEPs and employer-sponsored plans.
Traditional & ROTH IRA: Annual Contribution Limits
| Year |
Contribution Limit for Under Age 50 |
Limit for Age 50 and Over |
| 2002 |
$ 3,000.00 |
$ 3,500.00 |
| 2003 |
$ 3,000.00 |
$ 3,500.00 |
| 2004 |
$ 3,000.00 |
$ 3,500.00 |
| 2005 |
$ 4,000.00 |
$ 4,500.00 |
| 2006 |
$ 4,000.00 |
$ 5,000.00 |
| 2007 |
$ 4,000.00 |
$ 5,000.00 |
| 2008 |
$ 5,000.00 |
$ 6,000.00 |
| 2009 and thereafter |
Increases by $500.00 increments |
$1,000 more than "Under 50" |
Traditional IRA contributions only are tax deductible depending on your adjusted gross income and or participation in a retirement plan such a 401(K). Please see the chart below as to the degree of deductibility:
| Modified AGI: Before IRA Deduction |
Participation in Retirement Plan? |
Deductibility of Max is... |
| Single Filing |
Join Filing |
|
|
| Up to $34,000.00 |
Up to $54,000.00 |
Yes or No |
Full |
| $34,000.00- |
$54,000.00- |
No |
Full |
| $44,000.00 |
$64,000.00 |
Yes |
Partial |
| $44,000.00 |
$64,000.00- |
No |
Full |
| or more |
$150,000.00 |
Yes |
None |
| |
$150,000.00- |
No |
Partial |
| |
$160,000.00 |
Yes |
None |
| |
$160,000.00 |
No |
None |
| |
or more |
Yes |
None |
Who is Eligible to save through a Roth IRA?
It solely depends on your tax filing status and annual income.
| If Adjusted Gross Income Is: |
Eligible For: |
| Single Filing |
Joint Filing |
|
| $95,000 or less |
$150,000 or less |
Full Contribution |
| $95,001 - $109,999 |
$150,000-$160,000 |
Partial Contribution |
| $110,000 or over |
$160,000 or over |
Not Eligible for Contribution |
- Roth IRA conversion has an income limit of $100,000
- Roth IRA distributions are tax-free after age 59½ if withdrawn
- After-tax contributions to qualified retirement pans can now be rolled over into ROTH IRA.
- You may roll over 401(k), 403(b) or 457 plan in a Traditional IRA.
- You may contribute to an IRA if you are also participating in an employer- sponsored retirement plan; however IRA contributions may be partially tax deductible.
| Year |
Qualified Employer Sponsored 401 (k) plans |
Simple IRA Plans |
| |
Under Age 50 |
Over Age 50 |
Under Age 50 |
Over Age 50 |
| 2002 |
$ 11,000.00 |
$ 12,000.00 |
$ 7,000.00 |
$ 7,500.00 |
| 2003 |
$ 12,000.00 |
$ 14,000.00 |
$ 8,000.00 |
$ 9,000.00 |
| 2004 |
$ 13,000.00 |
$ 16,000.00 |
$ 9,000.00 |
$ 10,500.00 |
| 2005 |
$ 14,000.00 |
$ 18,000.00 |
$ 10,000.00 |
$ 12,000.00 |
| 2006 |
$ 15,000.00 |
$ 20,000.00 |
$ 10,500.00 |
$ 12,500.00 |
| 2007 |
Increases $500 Each year |
Increases $500 Each year |
Increases $500 Each year |
Increases $500 Each year |
SEP Contributions:
Self-employed individuals that are sole proprietors may contribute 15% of net earnings (income less expenses) up to a max of $40,000 per year whichever is less.
Self-employed individuals that are set up as a corporation may contribute 15% of W-2 salary up to a max of $40,000 per year whichever is less.
What to Think About?
Consolidating your IRA's
- Diversifying your IRA's into alternative investments like Managed Futures.
- Do some income, growth rate analysis and retirement planning; estimating when you'll need the funds in your IRA for retirement income.
- Rolling over your 401(k) plans from previous employers into your IRA or SEP plans.
- Contributing the maximum to your 401k and IRA plans during the 1 st month of the year.
- Setting up an IRA account at Millennium trust Company. Go to Alliances page to read more.
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